‘Our companies reported profitability despite the uncertainty of 2020’ says company’s Vice Chairman

KIPCO – the Kuwait Projects Company (Holding) – has announced a net profit of KD 6.5 million (US$ 21.4 million) for the year ended 31 December 2020, compared to KD 30 million (US$ 99 million) originally reported for 2019. The drop of 78 per cent is attributed to the impact that the global events of 2020 have had on our business operations.

Earnings per share for 2020 came to 0.4 fils (US$ 0.13 cents), compared to 10.1 fils (US$ 3.3 cents) per share originally reported at the end of 2019.

The company’s 2019 financials were restated during 2020 due to a change in the classification of OSN after an increase in ownership.

KIPCO’s Board of Directors is recommending a cash dividend of 5 per cent (5 fils per share) subject to approval by the company’s General Assembly and regulatory authorities.

KIPCO’s consolidated assets remained at the KD 10.3 billion (US$ 34 billion) reported at year-end 2019.

With the global COVID-19 pandemic evolving throughout 2020, the uncertain situation was one that KIPCO monitored closely in order to continually evaluate is business impact and mitigate its repercussions.

Our commercial banking business suffered from a lower discount rate, interest deferral of loans in Kuwait mandated by the authorities, and increased provisioning. The pandemic provided an opportunity to accelerate the digital transformation of our platforms, where Burgan Bank introduced a new retail smart phone application and other digital solutions for SMEs.

In the insurance sector, the core business was mostly stable, with reduced gross written premiums in motor and travel policies offset by the reduction in claims from motor and medical insurance. Revenue was preserved thanks to corporate business lines.

Our media business, namely OSN, was served by the health recommendations to stay at home. While new sales were impacted by retail outlet closures, customer consumption of content increased and churn decreased. OSN’s OTT platform, OSN Streaming, saw a rise in subscriber numbers.

Real estate and hospitality was affected by travel restrictions and closures, leading to a waive of rent for several months to help tenants whose businesses were closed due to mandatory lockdown. Hospitality net income suffered a loss, while demand for commercial real estate witnessed a drop in 2020.

Our petrochemical investments were impacted by the drop in oil prices and low demand for the better part of 2020.

In education, extended school closures resulted in a transition to e-learning classes. E-learning platforms have been upgraded to accelerate the digitization of our schools and university, and operating costs were reduced across the board.

Mr Faisal Al Ayyar, KIPCO’s Vice Chairman (Executive), said that with the challenges brought on by 2020, reporting profitability is an achievement:

“Our 2020 results reflect the efforts of our core companies to mitigate the impact of the global COVID-19 pandemic. Our businesses worked hard to ensure that the services provided to our customers continued uninterrupted, while safeguarding the health and safety of our employees. Our companies were able to report profitability despite the uncertainty and challenges of 2020.”

He added:

“Today we face the challenges that come with a second wave of the pandemic, and while we hope that the vaccine rollout will help curb the spread of the virus, we continue to be cautious. We will continue to closely monitor the unfolding events throughout 2021, and though it has become evident that it will be some time before we go back to a more normal way of life, people have started to adjust and this has reflected in the form of a slight recovery in the latter months.”